This year, GHJ Inc. received the following dividends: BP Inc. (a taxable California corporation in which...

This year, GHJ Inc. received the following dividends:


BP Inc. (a taxable California corporation in which GHJ holds a 2% stock interest)	$	17,300
MN Inc. (a taxable Florida corporation in which GHJ holds a 52% stock interest)		80,800
AB Inc. (a taxable French corporation in which GHJ holds a 21% stock interest)		17,300

Required:
Compute GHJ’s dividends-received deduction.

Solutions

Expert Solution

Dividend Received Deduction

$ 72,415

Working:

No.	Company	Dividend Received	Percentage of Ownership	New Deduction Percentage	Deduction (New Rules)
1	BP Inc.	$ 17,300	2% (Less than 20%)	50%	$ 8,650
2	MN Inc.	$ 80,800	52% (Less than 80%)	65%	$ 52,520
3	AB Inc.	$ 17,300	21% (Less than 80%)	65%	$ 11,245
Dividend Received Deduction	$ 72,415

New Deduction Percentages:

Percentage of Ownership	New Deduction Percentage
Less than 20%	50%
20% or more (but less than 80%)	65%
80% or more	100%

1) Question has been answered based on new deduction rules.

ekkarill92 answered 1 year ago

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